Spotlight Put on Founders of Drug Firm in Outbreak

A $4.2 million, four-bedroom Boston penthouse overlooking the Charles River in the Back Bay neighborhood. A $3.5 million home in Southborough, Mass., with more than 11,000 square feet, a home theater and an indoor saltwater pool. A $2.35 million vacation home on Cape Cod.

For the Conigliaro family of Massachusetts, owners of these properties, the past decade had been one of business success and rising personal prosperity.

Starting with a recycling company created by one brother in 1990, the family branched into pharmaceuticals, riding changes in the health care landscape to become a major supplier of tailor-made drugs to hospitals, clinics and doctor’s offices across the nation.

But those family enterprises are now under intense scrutiny by federal and state authorities and personal-injury lawyers. A pharmaceutical compounding company that is part of the family portfolio — the New England Compounding Center — was the source of a fungus that led to a meningitis outbreak that as of Wednesday had killed 24 and sickened 317.

Massachusetts officials said Tuesday that during an inspection this month investigators had found dirty mats and hoods, a leaky boiler, dark debris floating in vials of medicine, and evidence that the lab was not leaving enough time to properly sterilize some of its products.

Officials have pledged to revoke the licenses of Barry J. Cadden, a brother-in-law who was the head pharmacist at New England Compounding, and of the pharmacy itself. And production at the family’s larger pharmaceutical company, Ameridose, has been suspended and is also being investigated.

As the cases mount, the Conigliaros have stayed out of the public eye, speaking only through a longtime lawyer.

But the release of records by the Massachusetts Department of Public Health on Monday, as well as interviews with former employees of the drug companies, offer new details about the family and how the businesses operated.

Since the national outbreak began in September, most of the scrutiny has been focused on two founders of New England Compounding, Gregory Conigliaro, an entrepreneur who has run a major recycling operation for two decades, and Mr. Cadden, the pharmacist who married Mr. Conigliaro’s sister Lisa, also a pharmacist.

But the Massachusetts records show that when New England Compounding was founded in 1998, the majority stake actually belonged to the wife of another brother, Dr. Douglas Conigliaro. His wife, Carla Conigliaro, was listed as having 65 percent of the company.

Dr. Conigliaro, 51, an anesthesiologist, is not named in founding documents for either of the drug companies, nor is he listed on the company’s Web site. But three former employees, including a senior manager, say that he had the final word in all big decisions at Ameridose.

Asked why Dr. Conigliaro’s role in the company had not been more explicit, a spokesman for the company said he could not provide any information.

Ameridose and New England Compounding are private companies, and are not required to report their financial status publicly. But in a blog post in September, the Westborough town manager noted that Ameridose, which moved there in 2010, was among the largest job creators in town, adding 250 new jobs in 18 months.

Former employees said the companies’ growth was palpable. All of the employees spoke on the condition of anonymity, saying they had signed legal agreements with the company not to discuss it. “It was a license to print money,” the former Ameridose manager said. “I’ve never seen a business grow so fast.”

Gregory Conigliaro, 46, is described by former employees and two former neighbors as a charismatic entrepreneur. They said that he likes to give parties, and in September he raised $37,000 for Senator Scott P. Brown in a fund-raiser at his Southborough home, according to The Boston Globe. Mr. Brown has since said he would donate the Conigliaros’ contribution to charity.

“Greg was Mr. Personality,” said one of his former neighbors, who expressed admiration for Mr. Conigliaro but said he did not want to be identified. But Mr. Conigliaro, with his attention on the recycling business, left day-to-day management of the pharmaceutical companies to others.

Mr. Cadden, a 1990 graduate of the University of Rhode Island’s College of Pharmacy, ran New England Compounding. His wife, Lisa, whom he met in pharmacy school, also worked at the company, though in recent years not on a full-time basis, former employees said.

By the employees’ accounts, Dr. Conigliaro, with his deep knowledge of the pain management industry, was the driving force behind Ameridose and Medical Sales Management, the joint marketing arm for the two drug companies. They also said he was difficult to work with, expecting long hours and pushing a corporate culture of speed.

“Doug was the guy who was all ‘rush, rush, rush. Got to get it done,’ ” said the former Ameridose manager. “There was no question in anyone’s mind that he was the guy in charge.”

Dr. Conigliaro was accused in a malpractice suit of puncturing the spine of a 64-year-old woman during a 1995 operation to insert a pump to deliver painkillers. The woman became paralyzed below the waist and died in 1998, according to the lawsuit and state records.

A malpractice lawsuit was settled for $1 million, according to the Florida Department of Health, and Dr. Conigliaro was fined $10,000 by the state medical board in 2002. He later left the Florida anesthesiology practice, JLR Medical. Carl Michael, the chief executive of JLR, said in a recent interview that Dr. Conigliaro left “on good terms and of his own volition.”

Now that lawsuits against New England Compounding are piling up — at least 20 have been filed, public records show — the Conigliaro family and their assets are in a spotlight.

Douglas and Carla bought the $4.2 million Back Bay home in April, according to public records. Cars registered under their names include a Porsche 911 and a Mercedes-Benz S-class. They also own two homes in Florida, and two in Dedham, Mass.

Gregory Conigliaro and his wife, Cynthia, bought the home in Southborough for $3.5 million in 2010, and the Cape Cod vacation home for $2.35 million this year, according to public records.

In 2005, Barry and Lisa Cadden built a 13-room house in Wrentham, Mass., assessed at $1.8 million. In 2009, they paid $785,000 and then renovated a waterfront home in North Kingston, R.I. Peter McGrath, a lawyer in New Hampshire representing a client who is suing New England Compounding, has asked a judge to place a lien on the personal property of Gregory Conigliaro and the Caddens. He said he was waiting for information before deciding whether to go after the assets of Douglas and Carla Conigliaro and Ameridose.

“If we can pierce the corporate veil based on what we discover, we can go after the individuals and their homes and their assets,” Mr. McGrath said.

Sheelagh O’Brien contributed research.

A version of this article appears in print on October 25, 2012, on page A18 of the New York edition with the headline: Spotlight Put On Founders Of Drug Firm In Outbreak. Order Reprints|Today's Paper|Subscribe